24 July 2023
The latest New York Fed Credit Access Survey report reveals a concerning trend – stricter lending practices and reduced consumer demand for loans.
Key highlights from the June report include:
1. The credit application rate dropped to 40.3%, its lowest since October 2020.
2. Credit application rejection rates surged to 21.8%, the highest since June 2018.
3. Auto loan rejections skyrocketed to a record 14.2%.
4. Despite fewer applications, rejection rates for all loan types increased dramatically.
Moreover, Americans’ credit scores are taking a nosedive as people halt their debt repayments. The housing market is faltering, with home sales dipping 15 of the last 17 months. The retail sector is also grappling with weak inflation-adjusted sales for four out of the past five months. Furthermore, the Fed’s reported industrial production fell by 0.5% with a downward revision for May.
Despite some economic pundits shifting their prognosis from recession to soft landing, these troubling signs suggest a challenging economic future.